Staff Turnover Could Send You Broke!
Updated: 7 hours ago
The elbow touch has replaced the traditional handshake as the way of welcoming new people to the team. But it could be the most costly gesture you ever make. We all know that hiring the wrong candidate or losing a valuable member of staff comes at a cost. But it costs much more than you think!
If your competitors are equally as good and offer the same products or comparable services - then, how do you grow your business? The easy solution is to reduce your prices. However once you do this, there’s no going back and you risk triggering a price war with competitors that may have deeper pockets than you.
More often than not, the answer is standing right in front of you - it's your people.
Above all else, it’s the people you employ that can make or break your business. You can have the best products and offer the very best service in the world, but without the right people working for you it can come to nothing.
Hiring the wrong candidate or losing a valuable member of the team will cost you and the actual cost is more that you think. That's because we forget the indirect or associated costs. Take the time to calculate these and the result will shock you.
Direct costs like advertising and recruitment fees, formal training and wages are obvious and easy to calculate. But these are just the tip of the iceberg and what's hidden are the indirect costs. Despite the fact these are real costs to the business, they are rarely taken into account. They include lost opportunity costs (missed sales or productivity loss), the costs of on-the-job training plus the costs associated with coaching and supervision. If included, then the true cost of hiring has proven to be 4 to 5 times the annual salary of the position. Yes - countless studies have proven this across every industry studied.
So, in reality, the cost to hire a new employee with a base salary of $50K and get them up to speed will be as much as much as $250K. Although you won't have the obvious trigger of signing a cheque to pay this amount - don't be fooled - they are real and they will reduce your bottom line.
Mitigate the Risk to Your Business
Hiring the right people for the job and getting them up and running as fast as possible makes good business sense. As does maximising their productivity and retaining them for as long as possible. If you are to achieve this, then you need to consider more than how you recruit staff. You must also consider how you choose successful candidates, how you orientate them into your business and what you do to keep them from leaving and joining your competition.
Facts Worth Considering:
Most companies consider the job offer as the final step in the hiring process.
Studies have shown that changing jobs is one of the 4 most stressful experiences in life – the others are moving house, the death of a loved one and the breakdown of a relationship.
The first 4 to 8 weeks of a new job will influence how long a person stays, their work ethic, how well they align to company culture and their overall contribution to the business.
'Sink or swim' is the most common orientation program for new employees.
New employees are rarely given a written set of clearly defined performance goals when starting a new job.
Even in a healthy company, one resignation can trigger an avalanche. That’s because it can cause others to think about new opportunities and the need for a change (the grass is greener on the other side of the fence).
7 STEPS to Minimise Recruitment Risk
Drawing on experience and research, idResults has identified 7 critical steps to mitigate the risks of making the wrong decision and minimise the potential cost to your business. They provide a structured approach for recruiting, selecting and retaining talented people and apply to every company, regardless of size. The time and effort required for each step will vary and depends on the organisation and the position. Plus each step can be scaled up or down to suit the business.
Position Analysis - Combines a Position Description together with a Person Specification for the vacant position.
Recruitment Strategy - An agreed plan that considers the best way to find suitable candidates.
Structured Selection Process - A standard interview plan prepared using methods such as targeted selection with scored assessments for objectivity.
Reference & Criminal History Check - To safeguard company assets and your reputation.
Company Orientation/Induction - A formal approach for delivering important knowledge and information about the Company in a way that supports a positive culture.
Performance Management Plan - A document that details clearly defined and measurable goals to be achieved and an action plan that addresses defined learning/training needs.
Mentoring - Using your top performers to help develop and grow others.